Insurers Rights under Professional Indemnity insurance, in case of a Loss
The insurer can defend claims against the insured and has the right to take over the defense. The insurer also has the right to have full discretion while conducting and settling any proceedings. Insurers’ rights under Professional Indemnity insurance in case of a loss, are well defined.
After taking over the defence, the insurer has the right to relinquish any claim of the same. The insurer’s expenses for defense and settlements will be deducted from the policy’s indemnity limits.
If the insurer chooses to defend the insured, its liability under professional indemnity policy remains the same. No action taken by the insurers in defending the claims shall be modified or expanded in any manner.
The insurer can pay the insured for claims under this policy, including a series of claims. After payment, the insurer can relinquish control of the claim’s defense and won’t be liable.
The insurer can cancel the policy with a 30-day written notice to the insured’s registered address. In any such event, the Insurer should return the premium in pro-rate. If there is any retention clause, then the insurer should apply the same before the settlement of the pro-rated premium.
Read More: Duties of Insured Under Professional Indemnity Insurance When a Loss Occurs?
The insured must cooperate with the insurer for claim settlement and avoid making decisions without informing the insurer. Like rights of policyholder, Insurers’ rights under Professional Indemnity insurance, in case of a loss, are well defined as well.
Case: 1
The builder drafted plans for a concrete slab, the foundation of a storage building.The first draft needed amendments, so a second draft was submitted and approved by the client.
The concrete slab was laid based on the approved plan, and the storage facility was built.
However, after a few weeks, cracks started appearing in the concrete slab, and a claim was lodged against the builder. The investigation revealed that the builder submitted the wrong draft instead of the approved one.
To save itself from the long court battle, the builder opted for the out-of-the court settlement with the client and agreed to pay Rs 10 lakh. When the builder paid the compensation, he approached his professional indemnity insurance company.
However, as the builder had entered into the settlement agreement without the consent of the insurance company, the insurer refused to settle his claim. As the builder did not take the permission of the insurance company before settling the claim, the insurer rejected the claim.
Case: 2
Last week, a case was filed against Dr. Rajiv Saxena when the family of one of his patients, Ajay, charged him under negligence case.
Ajay was hospitalised when he started complaining of chest pain. The on-duty doctor Rajiv started the treatment immediately, however, seeing the deteriorating condition of Ajay, the doctor gave him some medicines. However, immediately after the medicine, Ajay fell unconscious and later died. It was found that Ajay was allergic to certain medicines and without checking it, the doctor gave him medicines which made his condition worse.
Being a breadwinner of the family, the sudden demise of Ajay shattered his family’s. At the same time, his brother filed a case against Rajiv. Luckily, Rajiv had a professional indemnity insurance, and he approached the insurer for the claim settlement.
Read More: Which Professional Services Should Consider Buying Professional Indemnity Insurance?
However, at the time of notifying the claim, Rajiv did not give complete details of the accident along with the information related to the patient’s health condition. The insurer followed Rajiv and called him numerous times to get the complete information. However, Rajiv did not cooperate with the insurer, and as a result, the claim got delayed by more than two months.
At last, the insurer rejected the claim due to non-cooperation of Rajiv. Without material facts about the case, how can Rajiv expect his insurer to settle the claim?
